Microsoft is gearing up to cut more jobs, primarily from its smartphone unit, as the company looks to restructure and refocus on its core businesses. This is in addition to the 18,000 employees laid off over the course of the last year.
In a blog post on its website, Microsoft stated that the layoff will affect Microsoft’s hardware group, which incorporates the handset division acquired it from Nokia for $7.2 billion. Microsoft also revealed it would say goodbye to the last two major Nokia executives still at the company, Stephen Elop and Jo Harlow, in the near future.
A Microsoft spokesman said the cuts are all about focusing the company on core businesses, which is why it just sold some of its mapping business and ad sales business to AOL. “We want to concentrate on where we can add value,” he told Fortune.
Meanwhile CEO Satya Nadella reiterated the company’s commitment to its phone business in an internal e-mail to employees, but also stressed that some refocusing was necessary. In this new direction, Microsoft’s phone business would reflect the company’s overall Windows strategy. “We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family,” the e-mail reads.
As part of its restructuring plan, Microsoft is also preparing to write off a massive $7.6 billion – basically a tacit admission that paying so much money for the floundering Nokia was not the most financially sound decision. That comes in addition to a restructuring charge of between $750 million and $850 million. The one time charge means that Microsoft will take a hit against its earnings for one quarter, although most investors tend to welcome such news as a sign that a company is removing fat from its businesses.
Microsoft expects the layoffs and related restructuring to be complete by the end of 2015 and fully completed by the end of the company’s fiscal year which ends June 30, 2016. The company is set to unveil two flagship devices later this year alongside Windows 10 Mobile.
